SMARTPHONE maker Xiaomi has joined a rush of Chinese tech firms venturing into the semiconductor sector, announcing Wednesday a new chip to help smartphone cameras process images.

Xiaomi’s Surge C1 chip was developed after an earlier unsuccessful attempt at producing a smartphone processor and comes as Chinese Internet giants, automakers and even home appliance firms invest heavily in semiconductor research and development.

While all remain in the early stages, their drive dovetails with China’s policy to boost the domestic semiconductor sector as demand for chips soars.

The initiative has become ever-more critical, with a global chip shortage crimping supplies and U.S. sanctions hobbling Huawei Technologies Co.

The trend is a global one, with major U.S. companies including Alphabet Inc.’s Google, Amazon.com Inc. and Facebook Inc., also investing in their own chipmaking efforts.

In addition to Xiaomi, Chinese Android phone maker Oppo is following Huawei and Apple Inc.’s lead by developing its own chips for handsets.

The company said that it has developed power management that it uses for a line of in-house flash chargers, and is currently conducting research and development for radio frequency (RF) and bluetooth chips.

Large Chinese Internet companies, by comparison, have focused their efforts toward cloud computing and artificial intelligence (AI), targeting a market dominated primarily by Intel Inc. and Nvidia Corp.

Search provider Baidu Inc., the earliest entrant into chips among China’s web giants, has two chip projects.

Baidu established its Kunlun division for smart vehicles chips in 2018, and is set to mass produce its Kunlun II chip this year, according to its CTO. The unit recently secured funding valuing it at about US$2 billion.

Honghu, a unit making voice recognition chips, placed its first component in a Baidu smart speaker in 2020.

Alibaba Group, meanwhile, launched its Pingtouge chip division in 2018 after acquiring a domestic startup. In 2019, it came out with its first AI chip, the Hanguang 800, which the company said it intended for use in its own cloud computing ecosystem.

Social media rivals Tencent Holdings and ByteDance have entered the sector more slowly. Tencent has made steady investments in chip startup Enflame, while ByteDance has ramped up hiring for developing Arm-based server chips.

The Internet giants’ forays into chips mirror similar moves into chip building by Google, Amazon and Facebook, both in terms of opportunities and dilemmas, analysts say.

While self-developing chips could help companies reduce costs and improve performance, it could pose long-term economies of scale problems, said Stewart Randall, who tracks the semiconductor sector at consultancy Intralink.

As cars get smarter, chips have become a key component in products from sensors to control units. China’s auto industry, which suffered from chip supply shortage in recent months, are also now developing their own chip products.

ECARX, an auto tech startup backed by Geely’s chairman and Baidu, plans to supply products with 7 nanometer (nm) chip as early as next year through its joint venture with Arm China.

China auto chip startup Horizon Robotics raised US$900 million from BYD, Great Wall and other industry companies.

Even appliance makers have launched their own chip divisions. Air conditioner makers Midea Group Co. and Gree Electric Appliances of Zhuhai, as well as microwave manufacturer Galanz and refrigerator maker Haier Smart Home Co. have R&D units for chips and in some cases have already placed them in products.

(SD-Agencies)